What is a Journal Entry Format?

Let us discuss each of the columns in detail –

Standard Format of Journal Entry in Accounting

The basic format of a Journal Entry in accounting is shown below:

Journal

Column 1: Transaction Date

The first column in the Journal book consists of the transaction date. The transaction date refers to the actual date on which the transaction has been incurred and not the date of reporting the transaction.

Column 2: Journal Entry

The second column is where we record the business transaction by passing a Journal Entry. Journal entries refer to the systematic recording of business events and transactions on a given date by applying fundamental rules of bookkeeping. At the bottom of the Journal Entry, we post a brief narration describing the transaction.

For example, suppose on Oct 15, 2019, A Ltd bought furniture worth US $ 1,000/- for business purposes. In this case, we will debit the Furniture Account (Debit what comes in) and credit the Bank Account (Credit what goes out) with the US $ 1,000/-

The journal entry format in excel for this transaction will be as follows:

Column 3: Folio

The third column is the folio number, which indicates the reference number used to identify the particular entry in respective ledger accountsLedger AccountsLedger in accounting records and processes a firm’s financial data, taken from journal entries. This becomes an important financial record for future reference. It is used for creating financial statements. It is also known as the second book of entry.read more. This reference number could be numeric or alphanumeric as well.

Column 4: Debit Amount

The fourth column shows the amount by which the respective account is debited in the transaction.

For Instance, On Feb 07, 2019, ABC Inc. paid office rent of US $ 250.00 and Building insurance of US $ 400.00.

Now, since office rent and building insurance is an expense for ABC Inc., we will debit both the accounts (Debit all expenses and losses), i.e., the Rent account by the US $ 250.00 & Insurance account by the US $ 400.00, and the will credit the bank account by the US $ 650.00(Credit what goes out) as:

The format in excel for this transaction will be as follows:

Now, with the help of the fourth column, we can clearly distinguish which account is affected by how much money.

Column 5: Credit Amount

Like column 4, which shows the amount by which an account is debited, column 5 represents the amount by which the respective account is credited.

Continuing the above example, the payment of rent and Insurance expensesInsurance ExpensesInsurance Expense, also called Insurance Premium, is the amount a Company pays to obtain an insurance contract for covering their risk from any unexpected catastrophe. You can calculate it as a fixed percentage of the sum insured & it is paid at a daily pre-specified period. read more shows an outflow of money from the business. Thus we credited the bank account with a total of US $ 650.00

Examples

On Oct 15, 2019, ABC Inc. sold 200 units @ US $ 10/unit to Mr. John on credit.

To record the transaction, we will enter the transaction date, which is Oct 15, 2019, in the first column.

Essential Points to Note About Journal Entry Format

  • Journal Entry should be recorded with the transaction date only.Consider the fundamental accounting principleAccounting PrincipleAccounting principles are the set guidelines and rules issued by accounting standards like GAAP and IFRS for the companies to follow while recording and presenting the financial information in the books of accounts.read more to identify the relevant ledger accounts affected in the business transaction.Once you have identified the relevant ledger accounts to record the journal entry, pay attention to 3 golden rules of bookkeeping to determine which ledger account is debit and which one to credit.Make sure the total of the debt amount and the credit amount are always equal for each transaction.The transaction amount should be mentioned in the reporting currency. Reporting currency refers to the country’s domestic currency where the registered office of the company is located. If the company does business in multiple countries, transactions done in foreign currencies should be first converted into reporting currency and then recorded in Journal.

This has been a guide to Journal Entry Format. Here we discuss each element of journal entry format in accounting with detailed explanations & examples. You can learn more about accounting from the following articles –

  • Accumulated Depreciation Journal EntryCoinsuranceCompound Journal EntryWhat are Expense Journal Entries?